SUBJECTS
|
BROWSE
|
CAREER CENTER
|
POPULAR
|
JOIN
|
LOGIN
Business Skills
|
Soft Skills
|
Basic Literacy
|
Certifications
About
|
Help
|
Privacy
|
Terms
|
Email
Search
Test your basic knowledge |
AP Microeconomics
Start Test
Study First
Subjects
:
economics
,
ap
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Additional costs to society not captured by the market supply curve from the production of a good - result in a price that is too low and a market quantity that is too high. Resources are overallocated to the production of this good
Comparative Advantage
Producer surplus
Price discrimination
Spillover costs
2. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price
Explicit costs
Resources
Economic Growth
Consumer surplus
3. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity
Variable inputs
Explicit costs
Determinants of elasticity
Economics
4. 0 < Ei < 1
Economics
Specialization
Unit elastic demand
Necessity
5. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0
Perfectly competitive long-run equilibrium
Resources
Profit Maximizing Resource Employment
Natural Monopoly
6. A measure of industry market power. Sum the market share of the four largest firms and a ratio above 40% is a good indicator of oligopoly
Price inelastic demand
Comparative Advantage
Four-firm concentration ratio
Excise Tax
7. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income
Marginal tax rate
Utility Maximizing Rule
Consumer surplus
Marginal Analysis
8. The practice of selling essentially the same good to different groups of consumers at different prices
Fixed inputs
Price discrimination
Spillover costs
Marginal Productivity Theory
9. Ed = 1
Average Fixed Cost (AFC)
Cross-Price Elasticity of Demand
Determinants of Labor Demand
Unit elastic demand
10. The price of a good measured in units of currency
Marginal Productivity Theory
Increasing Cost Industry
Absolute prices
Normal Profit
11. Measures the cost the firm incurs from using an additional unit of input. In a perfectly competitive labor market - MRC = Wage. In a monopsony labor market - the MRC > Wage
Marginal Resource Cost (MRC)
Comparative Advantage
Private goods
Incidence of Tax
12. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur
Constant Returns to Scale
Perfectly competitive long-run equilibrium
Implicit costs
Free-Rider Problem
13. The mechanism for combining production resources - with existing technology - into finished goods and services
Public goods
Specialization
Production function
Free-Rider Problem
14. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market
Marginal Cost (MC)
Monopolistic competition
Spillover benefits
Law of Supply
15. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.
Economic Growth
Total Revenue
Natural Monopoly
Marginal Resource Cost (MRC)
16. The combination of labor and capital that minimizes total costs for a given production rate. Hire L and K so that MPL / PL = MPK / PK or MPL/MPK = PL/PK
Producer surplus
Least-Cost Rule
Accounting Profit
Average Fixed Cost (AFC)
17. Ex -y = (%dQd good X) / (%d Price Y). If Ex -y > 0 - goods X and Y are substitutes. If Ex -y < 0 - goods X and Y are complementary
Total Fixed Costs (TFC)
Normal Goods
Long Run
Cross-Price Elasticity of Demand
18. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC
Total Revenue Test
Profit Maximizing Resource Employment
Incidence of Tax
Decreasing Cost industry
19. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient
Four-firm concentration ratio
Productive Efficiency
Allocative Efficiency
Substitution Effect
20. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax
Constant cost industry
Cartel
Perfectly inelastic
Excise Tax
21. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability
Marginal Resource Cost (MRC)
Law of Demand
Determinants of Demand
Resources
22. Production inputs that the firm can adjust in the short run to meet changes in demand for their output. Often this is labor and/or raw materials
Spillover costs
Income Effect
Incidence of Tax
Variable inputs
23. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources
Economies of Scale
Constant cost industry
Dead Weight Loss
Normal Profit
24. A good for which higher income increases demand
Marginal tax rate
Dead Weight Loss
Least-Cost Rule
Normal Goods
25. The ability to set the price above the perfectly competitive level
Economic Profit
Price inelastic demand
Excess Capacity
Market power
26. MUx / Px = MUy/Py or MUx/MUy = Px/Py
Utility Maximizing Rule
Price Ceiling
Market power
Increasing Cost Industry
27. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power
Monopoly
Economic Growth
Total Product of Labor (TPL)
Non-collusive oligopoly
28. A legal minimum price below which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent surplus
Determinants of Labor Demand
Law of Supply
Price floor
Price discrimination
29. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit
Marginal Cost (MC)
Long Run
Short run
Production function
30. Models where firms agree to mutually improve their situation
Luxury
Public goods
Collusive oligopoly
Substitution Effect
31. Total product divided by labor employed. APL = TPL/L
Total Revenue
Average Product of Labor (APL)
Market Economy (Capitalism)
Spillover benefits
32. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity
Marginal Productivity Theory
Derived Demand
Total Product of Labor (TPL)
Marginal Benefit (MB)
33. The total quantity - or total output of a good produced at each quantity of labor employed
Total Product of Labor (TPL)
Short run
Absolute prices
Subsidy
34. The output where AVC is minimized. If the price falls below this point - the firm chooses to shut down or produce zero units in the short run
Necessity
Shutdown Point
Resources
Positive externality
35. All firms maximize profit by producing where MR = MC
Profit Maximizing Rule
Inferior Goods
Market Equilibrium
Average Fixed Cost (AFC)
36. Entry of new firms shifts the cost curves for all firms upward
Perfectly inelastic
Marginal tax rate
Increasing Cost Industry
Production function
37. A group of firms that agree not to compete with each other on the basis of price - production - or other competitive dimensions. Cartel members operate as a monopolist to maximize their joint profits
Income Effect
Monopolistic competition long-run equilibrium
Cartel
Spillover benefits
38. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage
Economic Growth
Determinants of elasticity
Price Ceiling
Law of Increasing Costs
39. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good
Law of Increasing Costs
Average Variable Cost (AVC)
Marginal Revenue Product (MRP)
Economics
40. TR = P * Qd
Excise Tax
Perfectly elastic
Total Revenue
Monopolistic competition
41. Goods that are both nonrival and nonexcludable. One person's consumption does not prevent another from also consuming that good and if it is provided to some - it is necessarily provided to all - even if they do not pay for that good
Implicit costs
Relative Prices
Break-even Point
Public goods
42. The most desirable alternative given up as the result of a decision
Opportunity Cost
Marginal Resource Cost (MRC)
Economic Growth
Excess Capacity
43. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.
Producer surplus
Accounting Profit
Demand for Labor
Monopolistic competition long-run equilibrium
44. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand
Determinants of Demand
Determinants of Supply
Marginal Benefit (MB)
Determinants of elasticity
45. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.
Market Economy (Capitalism)
Economics
Productive Efficiency
Relative Prices
46. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand
Law of Supply
Monopoly long-run equilibrium
Natural Monopoly
Accounting Profit
47. ATC = TC/Q = AFC + AVC
Comparative Advantage
Market power
Scarcity
Average Total Cost (ATC)
48. Exists if a producer can produce a good at lower opportunity cost than all other producers
Perfectly competitive long-run equilibrium
Marginal Product of Labor (MPL)
Comparative Advantage
Scarcity
49. The change in quantity demanded resulting from a change in the price of one good relative to other goods
Four-firm concentration ratio
Substitution Effect
Law of Supply
Consumer surplus
50. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good
Market power
Income Elasticity
Spillover benefits
Negative externality